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The same thing happened in the 1980s when Michael Milken came up with his ingenious method of extracting and financing what used to be known as "good will" on a company's books, and the investment vehicle of the junk bond was invented, exploited, and eventually run into the ground.
I recall back in August, a fellow who had been speculating in real estate ("house flipper" just sounds so benign, doesn't it?) was bitching that the housing bubble had been a great thing until all the tyros got involved. Well . . . yeah, stupid. These Ponzi schemes are heavily dependent on a fresh supply of participants, and when that supply runs out, or confidence in the market begins to wane, the whole thing comes down. Just like invasions turning into occupations and sectarian strife, these things ALWAYS HAPPEN.
And, of course, the folks hurt most by the whole fiasco are the ones on the margin, the ones who just barely made it into a home they could live in (not an investment they could flip), and who suddenly find themselves saddled with more debt and less asset than they ever could have dreamed of. Meanwhile, Congress moves quickly to make sure that the big shots who were raking in millions, if not billions, don't get hurt too badly. You and me? Better find a refrigerator box before all the good curbsides are taken.
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